Launching a video streaming platform is a tantalizing prospect for many businesses looking to capitalize on the success of major players like Netflix. However, without careful planning and understanding of the various monetization models available, many businesses can easily fall into traps that limit their growth and profitability.
Additionally, technical decisions, such as choosing between multicast vs. unicast streaming methods, can significantly impact your platform’s scalability and performance. You could end up offering a service that doesn’t match your audience’s needs or miss out on key revenue opportunities.
In this article, we’ll explore the different types of video-on-demand (VOD) services and the potential pitfalls of each model, so you can avoid costly mistakes and position your business for success in an increasingly competitive market. Let’s dive in.
AVOD – Advertising-based Video-On-Demand
AVOD is one of the most popular VOD models. It typically offers free video content in exchange for ads. A widely known example of an AVOD platform is YouTube.
AVOD is commonly used by service providers with large, established followings. For example, influencers or businesses with significant audiences on platforms like Instagram or YouTube can leverage an AVOD model to generate revenue by allowing third-party advertisers to target their viewers.
Viewers appreciate AVOD services because they provide free content and typically feature fewer ads than traditional cable or satellite TV. Streaming platform ads are usually brief, ensuring they don’t overwhelm a viewer.
Furthermore, video streaming platforms can offer more precise ad targeting, as ads can be tailored to viewers’ interests. This personalization enhances the user experience and maximizes ad effectiveness.
AVOD services are becoming increasingly popular as viewers seek to minimize spending. This shift is also helping AVOD services outpace subscription-based models.
It’s worth noting that AVOD is sometimes confused with FAST (Free Ad-Supported Television), but they differ. While AVOD refers to video-on-demand services, FAST platforms focus on live TV content.
SVOD – Subscription-based Video-On-Demand
SVOD services are also quite popular. These platforms require a subscription fee, which is paid periodically (e.g., weekly, monthly, quarterly, or annually). In exchange, users get unlimited access to video content whenever they want.
SVOD services are appreciated for offering content that is often unavailable on ad-supported platforms. They are convenient for users who prefer to access all their content in one place rather than juggling multiple platforms. Some platforms even offer personalized recommendations based on user’s viewing history.
However, SVOD platforms are experiencing a decline in popularity due to “subscription fatigue,” a phenomenon where users grow tired of maintaining multiple subscriptions. As a result, many are switching to ad-supported services.
TVOD – Transactional-based Video-On-Demand
TVOD, also known as pay-per-view, is a model where users pay for individual videos rather than subscribing to a service. This model is often used for premium or exclusive content.
For example, many streaming platforms combine TVOD and SVOD models. A platform may offer a wide range of videos under a subscription plan but also feature exclusive content that requires additional payment. iTunes is a well-known example of a platform that uses the TVOD model.
Final Thoughts
The three VOD models discussed here – AVOD, SVOD, and TVOD – are among the most common, each offering distinct benefits. However, there are other models as well, such as NVOD (Near Video-on-Demand), FVOD (Free Video-on-Demand), PVOD (Premium Video-on-Demand), and hybrid revenue model, that can be explored based on specific business needs.
By choosing the right VOD model, you can optimize your revenue potential and provide a compelling, personalized experience for your audience.
